Leading Indicators Down in December

Note: A host of problems delayed the release of
this report.

February 23, 2001 --The University of San
Diego's Index of Leading Economic Indicators for San Diego County
fell 0.3 percent in December. The decline was due to big drops in
local stock prices and help wanted advertising, along with a more
moderate decrease in the outlook for the national economy. On the
positive side, there were solid gains in building permits and
initial claims for unemployment insurance. Consumer confidence
was virtually unchanged, but with a slight positive bias.

Index of Leading Economic
IndicatorsThe index for San Diego County that
includes the components listed below (December)Source: University of San Diego

- 0.3 %

Building PermitsResidential units authorized by building
permits in San Diego County (December)Source: Construction Industry Research
Board

+ 0.71%

Unemployment InsuranceInitial claims for unemployment insurance
in San Diego County, inverted (December)Source: Employment Development Department

Consumer ConfidenceAn index of consumer confidence in San
Diego County (December)Source: San Diego Union-Tribune

+ 0.03%

Help Wanted AdvertisingAn index of help wanted advertising in the
San Diego Union-Tribune (December)Source: Greater San Diego Chamber of
Commerce

- 1.03%

National EconomyIndex of Leading Economic Indicators
(December)Source: The Conference Board

- 0.70%

Decembers decline was the sixth
consecutive monthly decrease in the USD Index of Leading Economic
Indicators. One bit of relatively good news in an otherwise
dreary situation was that the magnitude of the drop was not as
severe as in some of the recent months. Another positive
development was that only three of the components were down in
December, the best showing in that regard since the current
downturn began. The outlook for the local economy remainsthe same: The local economy will hit some rough spots in
2001, but it is unlikely that they will be severe enough to be
considered a recession.

Highlights: Residential units authorized by
building permits surged in December, which is normally a slow
month for that component. The total number of residential units
authorized in 2000 was down only 3% from the 1999 totals, and
there was actually an increase in the number of multi-family
units authorized. . . Initial claims for unemployment
insurance reached a new seasonally adjusted low for the year
in December, just edging below the value recorded in April. That
put initial claims at the lowest level since February 1989. . .
On the other side of the labor market, help wanted advertising
dropped sharply. The implication of this combination of events is
slower job growth but little job loss in the local economy. . .
The tiny gain in consumer confidence reversed a nine-month
downtrend in that component. . . The national Index of Leading
Economic Indicators dropped for the third consecutive month,
signaling a potential downturn in the national economy. The
magnitude of the decline in the national Index in December was
the largest in nearly five years.

December's decrease puts the Index of Leading
Economic Indicators for San Diego County at 147.0 down from
Novembers reading of 147.5. Revisions in building permit
data for November did not change the level of the Index, but
caused the previously reported change to be revised downward to
-0.6%. The fluctuations of the Index of Leading Economic
Indicators for San Diego County for the last year are given
below: